Lisa Nachmias Davis
Davis O'Sullivan & Priest LLC
READ THE DISCLAIMER!!
updated March 31, 2015)
Somebody dies. After the
important things are taken care of
(grieving; burial or cremation; making sure any person or animal
dependent on the deceased person is being cared for), at some point it
is necessary to deal with financial matters. This
essay is a short guide to some of the pesky PAPERWORK required, that
is, filings in
probate court, especially for those who don't own a lot, or didn't
expect to be dealing with the probate court at all. Click on the
links to get to the forms or sites to which I refer. This is not
comprehensive list! There are particular complexities that relate
IRA or retirement plan distributions.
The first thought may be: Dad had a will, we must go to probate court. An alternative thought may be: everything was joint (or in the living trust), so there is nothing to do, we don't have to go to probate court. In each case, it isn't so simple.
True, CT law requires that anyone with custody of a person's original last will and testament take that will to the probate court for the town where the person resided (check this link for the correct court location). The will is filed with a simple form, "PC-211" (download PDF), and a death certificate with the Social Security number crossed out. (The court wants an original; you can cross it out on a photocopy that the Court can keep, but you would also bring or mail an original and ask for that to be returned.)
Just because there is a will, is "probate" required? Depends what you mean by "probate." Technically, "probate" is a legal procedure that takes at least five months, involves court hearings, means that the COURT (not a document) appoints an executor (if named in the will) or administrator (if not), and requires filing several forms with copies to many parties. "Probate" is ONLY required by law if the person who dies, with or without a will, owned real estate (not just a life use) that does not pass by the deed to the "surviving" joint owner, OR owned $40,000 or more of other assets that also don't pass by beneficiary or joint ownership to another person. (This could include life insurance, if there was no beneficiary or the beneficiary was deceased.) You can read more about this (PDF again) on the Probate Court website, too. So whether or not "probate" is required depends on what was owned, and how it was owned.
What if the person died owning something, but not real estate and not as much as $40,000 or other stuff? (Not counting the things that passed by beneficiary designation, joint ownership, etc.)
If the person owned assets, but NOT real estate, and LESS than $40,000 (not counting what passed by beneficiary, etc.), there is still some paperwork to be done at the Probate Court in order to get those assets out of the dead person's name and into someone else's. That is -- it depends. If the person's "assets" consisted of old furniture, dishes, and a few books, nobody is probably going to ask for paperwork if the children, or the family friend -- whoever is in charge -- takes the stuff home or to Goodwill. The assumption is that the cost of removal wipes out the value of the items. (If the person's "assets" consist of collection of Hummel figurines and the family is about to come to blows over who gets which one, that could be different!) Ordinary "stuff" doesn't require the Probate Court unless there is an argument about what happens to it.
Assume for the
moment that Dad owned bank or brokerage accounts jointly with Joe and Suzy, and these
accounts passed to Joe and Suzy upon death. However, his $5,000 life
insurance policy named Mom, who died five years ago. The insurance
company won't pay the $5,000 to Joe and Suzy but want to make the check
to "Estate of Dad." What to do? Joe or Suzy can file Form PC-212 with
the probate court. This form lists the funeral and other expenses
plus any debts Dad owned when he died. It also asks for a list of
what Dad owned that requires disposition (in this case, only the
$5,000). If the expenses are more than $5,000, whoever files the
PC-212 can ask that the $5,000 be paid over to whoever paid the
expenses. If the expenses (let's say, the funeral expenses) have not
been paid, the form can ask that the $5,000 be paid over to whoever is
owed (let's say, the funeral home). I keep mentioning the funeral home
because the court will ask not only for the death certificate but for a
copy of the funeral bill saying "paid." In either case, once the
tax return is filed (SEE BELOW) and probate fee paid (SAME) and another
$15 paid, the Court will issue a decree saying that the $5,000 goes to
whoever paid the expenses. But suppose the expenses were $10,000
and the life insurance that has no beneficiary has $30,000 of proceeds.
extra $20,000 has to go to the
beneficiaries in the will, or if there is no will, to the
"heirs." This requires Form PC-212A,
request for an order of distribution. If Dad had 10 kids, then even if
the will left everything to John and Suzy, the form will have to
include a list of the other 8 children and their addresses, and they
must all get copies of the form. This is because without a will,
all 8 would be heirs. This can be a real pain! Almost as
bad as "real probate." In our office we refer to this whole
PC-212/PC-212A process as "mini
probate." It's a little like probate, just faster. Keep in mind
that if Dad had a $1 million living trust to avoid probate, but left
his car in his sole name -- no help for it, this mini probate is
DON'T RUSH THIS. It's
annoying enough without having to do it twice. The car title is
one big issue, of course. Another item often
overlooked is the deceased person's INCOME TAX REFUND. If he/she
died after paying estimated taxes or having taxes withheld, there may
be a refund. If the deceased
person was married, everything can probably go on the joint tax return
and the refund can just be issued to the spouse, but if not married,
then the refund may have to be listed on PC-212 discussed above, or go
through probate if big enough. (In any case, an
income tax return will have to be
filed by April 15th of the year following death.) Other refunds
to look out for: refunds from assisted living facilities; security
deposits; insurance payments. Check CTbiglist.com
checks. If Dad owned MetLife or other mutual insurance, check for
stock he didn't know he had. Also -- if there are a lot of heirs,
make sure you wait for all the doctor copays, monument charges, etc.
If expenses are more than assets, he or she who pays them gets
the assets, which is simpler paperwork. Don't rush.
What if the person died owning NOTHING AT ALL that requires even "mini" probate? AND had no will? Suppose Dad paid someone $5,000 to do a fancy living trust document and carefully titled every last little thing in the trust?
Bad news. There is still paperwork to file with the probate court. This is the infamous CT estate tax return -- either CT 706 or CT 706 NT. This is due whether you are doing probate, mini probate, or no probate.
If the person owned $2 million or more of whatever, in any form (even in a living trust, even with beneficiaries, even life insurance) then an actual estate tax return, CT 706, is required and probably tax will be owed, starting at 7% on amounts over $2 million. Click here for the DRS webpage that has all these returns. And CALL A LAWYER. This you don't do yourself. For years prior to this year, click here for older forms.
But even if the person died homeless on the New Haven Green and owned only a tent, the law seems to require a tax return -- in this case a CT 706 NT, the CT estate tax return for so-called "non-taxable" (under $2 million) estates. Click here . For years prior to this year, click here for older forms. This is due 6 months after the person's death.
For our friend in the tent, the fee for the CT 706 NT would be $25, the minimum fee, not zero, but probably nobody would feel any need to file the CT 706 NT and the court is not going to hunt someone down to pay that $25. For that matter, if Dad owned no real estate, but only a $10,000 bank account titled jointly with John and Suzy, probably if they "forget" to file the return, nobody is going to hunt them down either, although the the law is the law and as a lawyer I can't tell anyone not to obey the law.
When real estate is involved, however, or probate or "mini probate," you can't get away from it.
Suppose Mom and Dad owned a house jointly when Mom died five years ago. Nobody did anything when Mom died. Now Dad has died too (or wants to sell and move to assisted living.) Filing the return due when Mom died would be required now in order to clear title to the home, that is, in order to make the buyer's and mortgage company's title insurer satisfied and let the sale go through. They want the "opinion of no tax" that the court issues once the return is filed. (P.S. they may also want a "certificate of release of lien" filed on the land records; for this you fill out and file Form PC-205.)
Problem is, when the CT 706NT form is filed, by return mail you will get a BILL from the Probate Court -- even though there is no probate at all, and even though no tax is due either! Despite the fact that Mom's estate owed "no estate tax," a so-called "fee" must be paid to Treasurer, State of Connecticut c/o the Probate Court, assessed on the value of Mom's interests when she died. This includes not only her half of the house, but her half of any joint bank accounts, etc. and even the value of any survivor benefits on her pension that pass to Dad after she dies. If this adds up to $100,000, and Dad outlives her, the fee will be $377.50 (perhaps more if a will has to be filed or there are attachments to the form). When Dad dies, and he isn't married at that time and still owns $100,000, a new CT 706 NT will be required. This time, the fee will be $465. The fee starts at $25 and tops out at $12,500 on estates of $4,754,000. You can compute it with my spreadsheet by clicking this link.
Why not just wait until the house is sold to file this thing and pay this fee? One reason may be interest (for those dying after 1/1/11). The CT 706 NT is due six months after death, although extensions are available - there is a form (PDF) for that too. But if the CT 706 NT is not filed when due (with extensions), interest is assessed. The only exception is where the assets are $40,000 or less OR any portion of the estate passes to the surviving spouse "and the basis for costs" (that is, the person's assets reduced by 50% of what passes to the surviving spouse) "does not exceed $500,000." So where Mom/Dad have a little house and a savings account, all owned jointly, no more than $2 million combined, no interest due. (Basis would be $1 M - $500,000 = $500,000.) Another reason to file timely, however: record-keeping. If you wait for years to file the darn thing, how are you going to figure out what the house, bank account, etc. was worth at time of death? Then again -- who will know if you get it wrong?
Since my office doesn't make any real money doing the mini-probate and CT 706NT for you, but would still charge more than you might be thrilled to pay, you could try doing it yourself.
Tips on Form CT 706 NT:
If you really do need to hire our firm to help with this, we charge by the hour: as of this writing (2015), that means $325/hour for lawyer time, $150-$175/hour for paralegal/assistant time, although we may try to keep this at paralegal rates for very small estates or hardship situations. We did not invent the miserable rules that impose a tax return, and a fee, on everyone in Connecticut who dies. Remember the Beatles' song, "Tax Man"?
If not -- if you want to D.I.Y. -- GOOD LUCK!
P.S. my grateful public has been calling with "just a quick question" after reading this article. I truly appreciate your thanks, and hope this helps you, but to be perfectly honest, I don't want to create MORE unpaid work for myself as the price of trying to be helpful! So try not to call me with questions; save them up and schedule a (paying) consultation with me or another attorney. Of if you must, send an email.
INFORMATION IS NOT PROVIDED AS LEGAL ADVICE
ALSO: I can only provide general information, and will not provide advice about a particular case without a formal engagement. Writing to me does not create an attorney-client relationship.